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Financial Planning / Tax Strategies
|Subject: Re: 529 Plans and Gift Taxes||Date: 9/13/2013 2:07 PM|
|Author: irasmilo||Number: 119138 of 120811|
If an immediate transfer the parents (as owner) and to the grandchild (as beneficiary) would trigger only one gift tax, then a subsequent transfer of account ownership would not appear to constitute a taxable gift, but I know enought o know that logic and taxes are only sometimes related.
Any thoughts from the resident tax pros, or any other readers?
I would expect that every transfer of "ownership" would constitute a taxable gift. Transfer of assets to a beneficiary do not constitute a taxable gift because the tax code (Section 529) excludes the transfered amount from gift tax provided certain conditions are met. The "double gift" question rests on whether a contribution to a 529 plan owned by someone other than the donor constitutes a two-step transfer (to the owner and then to the plan) or is a direct transfer to the plan. I think it would be a stretch for the IRS to insist on the two-step interpretation.
On the other hand, transfer of plan ownership involves transfer of significant rights - namely, the right to determine how, when, and to whom to distribute the assets. This would certainly be a taxable transfer.
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